Speculative Buyers, Stay Away! This round is “Tenant’s Choice”

"Don't Buy Here" signs in English and Spanish in the Ocelot Portfolio, where the Tenant-Choice model was used to force lender Fannie Mae into a preservation deal with tenants preferred owner, Omni Management.

The work we do at UHAB is unique because, in some ways, we see foreclosure as a good thing. What we mean by that is that when a building falls into foreclosure, we believe it is an opportunity for tenants to assert a stronger position in determining the future of their building. When a renter-occupied building falls into foreclosure, ownership often changes hands. This change provides an opening for tenants to insert themselves into the negotiating process and determine for themselves who should be the next owners of their building. We call this model “Tenant Choice.”

At UHAB, we see four main methods of building ownership, each with benefits and shortcomings. We provide tenants with information on these different models of ownership and encourage them to have serious debates about which model they envision for their homes. We believe that we can empower whole buildings and communities by increasing tenant participation in planning for the future of their building. The four methods are described below, in order of least-to-most tenant responsibility.

  • Continue as a Rental: Tenants may decide that their responsibility is to pay rent and receive services. If tenants choose this model, UHAB organizers may help tenants identify responsible developers who will be long-term landlords that invest in the building and maintain affordability.
  • Joint – Venture: In a joint venture, tenants sit on a board alongside representatives from the building owner. The board has decision power on the day-to-day management and maintenance of their building that also includes representatives from the landlord and from the community.
  • Mutual Housing: In this model, multiple buildings are grouped together to form a community or city wide association. Tenants volunteer to sit on a board, alongside ownership, and make management decisions over their building, as well as other buildings in the association. Tenants keep costs down by agreeing to manage certain aspects of maintenance on their own, for example, taking out trash and sweeping hallways.
  • Limited-Equity Cooperative: In this model, tenants form a corporation for their building and then buy shares to become permanent owners of their apartment units. Tenants who decide they want their building to become a co-op are required to take on a great deal of responsibility, and commit time and energy towards the building and the community. Tenants have the most control over the way that their building is run, and may as well have the opportunity to pass the apartment on to their children.

We have a few big picture objectives for our tenant choice models of ownership training: tenant empowerment, and as always, asset preservation. We hope encourage tenants to talk as a community about what kind of relationship they would like to have with their landlord and to begin to see themselves as powerful decision makers in their buildings future. As the foreclosure crisis continues we hope to use the tenant choice model to as part of an innovative ownership strategy to stabilize distressed buildings and neighborhoods. We hope to involve tenant participation as part of a long term strategy of distressed asset preservation. With these four models of ownership in mind, we are thinking of creative ways to solve the foreclosure crisis and break the cycle of Predatory Equity.

(Don’t forget to check out our new Resources tab, where you can get copies of our Models of Ownership training packet.)

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